Speech by Minister for Law, K Shanmugam, during the Committee of Supply Debate 2014

5 Mar 2014 Posted in Parliamentary speeches and responses

Madam Speaker,

1. I thank the members who have given their comments. Two key themes emerged from most or at least several of the Members who spoke. First, developing a vibrant legal sector, and second, enhancing Singapore’s legal framework to strengthen our society.

Developing a Vibrant Legal Sector

2. On developing a vibrant legal sector, Mr Christopher de Souza and Mr Alvin Yeo expressed support for the establishment of the Singapore International Commercial Court (SICC) and Singapore International Mediation Centre (SIMC). Let me set out the economic context. Cross-border trade and investment in Asia is growing. From 2010 to 2020, global GDP is expected to increase by 73 per cent to over US$100 trillion by 2020. During the same period, it is expected that Asian economies will more than triple, from US$10 trillion to US$34 trillion. The volume and complexity of cross-border disputes are expected to grow in tandem.

3. Singapore’s legal sector has also grown substantially. From 2008 to 2012, the nominal value-added of legal services sector grew by slightly more than 25 per cent. The value of legal services exported from Singapore grew by more than 60 per cent. Demand for effective and trusted dispute resolution services will continue to rise.

4. Singapore is well-positioned to be a neutral third party venue for dispute resolution in this region. We have a highly trusted and sound legal system. We started some years ago to develop international arbitration in Singapore and that has been achieving significant success. Singapore is the third most preferred seat of arbitration, after London and Geneva, and SIAC is the fourth most preferred arbitral institution worldwide. In recent years, Singapore law firms ranked amongst the top international arbitration practices in Asia.

5. SIAC’s caseload is also growing. New cases rose from 99 in 2008, to 259 in 2013, along and in tandem with a series of measures that we’ve taken. The total value of disputes rose to a record high of more than S$6.06 billion in 2013, and exceeds the combined total of S$4.93 billion for 2011 and 2012. SIAC’s caseload is predominantly international and more than 80 per cent of the cases involve at least one foreign party. Establishing the SIMC and the SICC will extend our success in arbitration into adjacent areas of commercial mediation and court-based commercial litigation for international cases. The idea is to provide users with an entire suite of dispute resolution services, and they can choose from those which best meet their needs.

Singapore International Mediation Centre (SIMC)

6. Let me say something about the SIMC. Mediation is an important complement to arbitration and litigation. It allows parties to mutually arrive at a mix of legal and non-legal solutions in an efficient and cost-effective manner. It is intended that SIMC will offer world-class commercial mediation services, it will have a panel of high quality international mediators and experts, and it will provide innovative user-centric products and services. My Ministry is currently working with industry stakeholders including the Singapore Business Federation, the Singapore Academy of Law and SIAC, to establish SIMC. We will put in place the necessary legislation to strengthen and support framework for mediation. We expect that the SIMC will be launched later this year.

Singapore International Commercial Court (SICC)

7. Now let me turn to SICC. Similar to SIMC, SICC also aims to attract international cases which have little or no connection to Singapore. Parties who prefer transparency of open proceedings, the availability of appeal, or are involved in multi-party or non-arbitrable disputes, may prefer SICC to conventional international and commercial arbitration. There are similar models elsewhere, including the High Court of England and Wales, which has specialist Commercial Court in London, well known for large number of cases which involve international parties. The Dubai International Financial Centre Courts was established to handle international commercial disputes as well.

8. Why would a party choose SICC? Singapore is known for its commitment to the rule of law. Our judiciary is well regarded internationally for the quality of judgments and efficiency. Singapore is a neutral venue in Asia and this makes us especially attractive to foreign parties involved in cross-border disputes. Mr Alvin Yeo raised two points – the perception that SICC is a national court, and the international enforceability of SICC judgments. On the first point, SICC will be constituted as a division of the High Court of Singapore. SICC judgments will be treated, and enforced, as High Court judgments. My Ministry is preparing legislative amendments to establish the SICC. The necessary amendments will include changes to the Constitution, the Supreme Court of Judicature Act, the Evidence Act and the Legal Profession Act. We will go for public consultation soon on these. We will also consider the composition of the Court, the judges, the rights of audience and related issues. All of these will need to be considered carefully, bearing in mind that primarily, we are looking at attracting cases which have nothing to do with Singapore.

9. On Mr Yeo’s second point, namely the issue of enforcement of judgments abroad, SICC judgments can be enforced by registration in countries listed under the Reciprocal Enforcement of Commonwealth Judgments Act (“RECJA”), and the Reciprocal Enforcement of Foreign Judgments Act (“REFJA”), similar to any High Court judgment. For other common law jurisdictions not covered by these two pieces of legislations, SICC judgments can be enforced as a common law debt. But I do accept Mr Yeo’s point on enforceability. This has been considered and we will need to explore ways to enhance enforceability of SICC judgments. To some extent, if parties in the first place are not subject to compulsory jurisdiction, but are consenting to jurisdiction, then usually they will also take care of enforcement by contract.

10. In its report, the SICC Committee suggested that Singapore consider acceding to the Hague Convention of 30 June 2005 on Choice of Court Agreements. My Ministry is studying the feasibility of this suggestion. Earlier this year, the European Commission issued a proposal for an EU Council decision to approve the Choice of Court Agreements Convention. Once EU becomes a party to the Choice of Court Agreements Convention, enforceability of SICC judgments will be enhanced if Singapore decides to be a party to the Convention as well.

11. Developing Singapore’s dispute resolution framework in this way will benefit all Singaporeans. It will add to the growing volume of legal work coming to our shores, and create significant opportunities for lawyers based in Singapore and Singapore Law Practices. If successful, the SICC will attract more complex commercial litigation to Singapore and help develop our legal jurisprudence. There will also be other significant economic spin-offs in terms of increased demand for other supporting non-legal services, for example the tourism industry and the hospitality sector.

Insolvency and Bankruptcy

12. On issues of bankruptcy and corporate insolvency, Mr Vikram Nair asked for views on the recommendations of the Insolvency Law Review Committee (ILRC). The ILRC submitted its report to my Ministry in October last year. The ILRC’s main recommendation was to unify bankruptcy and corporate insolvency regimes in a single piece of legislation. This is to enhance clarity and access to our laws, and transition and coordination between the various insolvency regimes. The recommendations were also made to update core areas of Singapore’s bankruptcy and corporate insolvency regime. My Ministry welcomes the recommendations of the ILRC. Presently, we are considering feedback received from public consultation on the Report, which was concluded last December.

Discharge of Bankrupts

13. Mr Vikram Nair also raised the issue of discharge of bankrupts. Alongside review of ILRC’s recommendations, my Ministry is reviewing the bankruptcy regime. This is with a view towards putting in place a more rehabilitative regime that will allow bankrupts to be eligible for discharge within clear time frames, where justifiable. The time frame for discharge will be differentiated, depending on factors such as whether a bankrupt pays back a targeted amount, whether his creditors object to his discharge and whether there were extenuating circumstances during the bankruptcy (e.g. a debilitating illness). This approach should also provide an incentive for bankrupts to cooperate.

14. At the same time, we are mindful that such a regime should not create a moral hazard. It is likely that upon discharge, all bankrupts’ names will be placed on a national register for a fixed period. For those who are uncooperative in paying their targeted amounts, their names will remain on the register. These issues are being considered. As most bankrupts may become eligible for discharge after a fixed period, creditors will also be incentivized to undertake a better risk assessment.

15. Pending these changes (which will require legislative amendments), IPTO has also been actively reviewing the current cases where a person has been in bankruptcy for a very long period, to determine whether a discharge is suitable. These reviews include cases where bankruptcy orders were made more than 10 years ago. Many of these cases remain in bankruptcy because very little has been paid into their bankruptcy estates, and / or there has been very little cooperation with the Official Assignee during the administration of their bankruptcy. For these bankrupts, it will help if they make a debt settlement proposal to their creditors.

16. IPTO will assist to facilitate their discharge where possible. I think these points also answer the questions raised by Mr Pritam Singh.

Regulating the Internet

17. Mr Hri Kumar touched on laws to regulate online conduct. He spoke about updating our laws, example, the Penal Code, to better address anti-social behaviour taking place on the online space. The basic principle is clear: same standards of what constitutes anti-social behaviour and other unlawful conduct should generally apply both in physical world and in cyberspace.

18. The Member referred to the Computer Misuse and Cybersecurity Act, the Regulation of online news sites, and the Penal Code. The Computer Misuse and Cybersecurity Act was reviewed and updated in 2013. The amendments enabled us to take more timely and effective measures against cyberattacks that may threaten our national security, essential services, defence or foreign relations. The approach is no different to how we deal with national security threats in the physical realm.

19. With regard to regulation of online news sites: The standards and safeguards in place, under guidelines by MDA, ensure that online news websites publish responsibly. These issues really relate to MCI and MDA, which will be best placed to answer them.

20. The Government updated the Penal Code in 2007 to reflect advancements in technology and the changing crime trends. The amendments were made to numerous provisions, including two provisions which the Member spoke about. Sending SMS message containing an incitement to violence or counselling disobedience to the law would amount to an offence under Section 267C. And Section 367E of the Penal Code targets sex predators prowling online chatrooms and social media for young prey. Another example is making statements on blogs with deliberate intention to affect/wound religious or racial feelings of any person. That would be criminalised under Section 298.

21. To facilitate judicial fact-finding process for crimes involving use of computers and the Internet, in 2012, the Evidence Act was updated to facilitate admission of electronic records. But I accept the Honourable Member’s basic point that as technology advances, we need to relook and make sure that the law keeps pace with the criminal conduct made possible by technology, and perhaps we are already behind. So, I accept that. But these matters are primarily under Home Affairs – I will send to Home Affairs the Member’s substantive point. It’s either MCI or Home Affairs.

22. SMS will take the remaining cuts.

Last updated on 06 Mar 2014